THE Rs. 750 million Rights Issue of Amana Takaful, the pioneer of Takaful in Sri Lanka, is expected to power its expansion as well as compliance with regulatory capital requirements.
The Company last month announced 1 for 1 rights issue at Rs. 1.50 each. The move involves issuance of 500 million shares and comes up for shareholder approval at the EGM scheduled for 18 March. Once concluded, the rights issue will see Amana Takaful’s Core capital rise to Rs 1.25 bn, which will facilitate the company’s expansion strategies in spearheading Takaful in Sri Lanka as well as consolidating its position to meet changes in regulations pertaining to Risk Based capital and splitting of Life and General business.
“We feel bullish about the opportunities that are emerging in the post war development taking place, backed by long term economic policies of the Government. The changes in regulation pertaining to the insurance industry is also a strong impetus and the recent amendments to the Regulation of Insurance Industry Act (RII act) will be allow us to spread Takaful more strongly in Sri Lanka,” Amana Takaful CEO and Director Ehsan Zaheed said.
“These changes allow us also to spread our investments portfolio, which has up to now been limited. Further, the budget proposals are also an added source of strength to us, which will help us increase financial performance,” he added.
“The economic climate for investment is good in Sri Lanka as the regulator intends to adhere to a development oriented monetary policy. This will bring liquidity back in the market for investment and other activity thereby creating more opportunities for insurance companies to capitalise on. As Sri Lanka’s only Takaful provider we are readying ourselves to meet this very challenge,” Zaheed said.
In a related development, Amana Investments, the parent company of Amana Takaful, was awarded a licence to operate a full-fledged commercial bank, Amana Bank; Sri Lanka’s first fully fledged Islamic Bank. Amana Bank will herald a new era in Islamic banking and finance in Sri Lanka and grow with the momentum built by Amana Investments over the last decade of operations.
Amana Takaful Maldives also made news recently when it applied to be listed in the Maldivian Stock Exchange making it the first and only insurance company to do so in the country. Amana Takaful Maldives, a subsidiary of Amana Takaful Plc, has served the people of Maldives since 2003 and is a leading insurer patronised by the people, the government and private institutions alike.
Globally Takaful is growing fast and estimated to reach a staggering 7.4 billion by the year 2015 according to Moody’s Investors Service of the US, from 5.3 billion as at 2008 as mentioned in the Ernst & Young World Takaful Report of 2010. World over there are about 80 Takaful operators with an additional 200 Takaful windows. Furthermore, according to Bank Negara of Malaysia the global Takaful growth rate stands at 20 percent.